CMA set for showdown with Amazon and Microsoft over cloud dominance
The competition watchdog could be set for a showdown with Amazon and Microsoft after an independent inquiry group said the regulator should probe the two firms’ dominance in the cloud services market.
After launching an investigation into the market in 2023, the inquiry group said today that competition in the £9bn sector was not working “as well as it could” and customers may be facing higher prices, less choice and a lower quality of services as a result.
Amazon and Microsoft, which each have a share of between 30-40 per cent of the market, could also be muscling out competition in the industry, the group said.
“Our provisional view is that competition in this market is not working as well as it could be,” said Kip Meek, chair of the CMA’s independent inquiry body.
Under its new digital markets regime, the CMA may designate firms with “Strategic Market Status” (SMS), meaning it can impose conduct requirements and introduce pro-competition interventions.
However, any probe could set the CMA on a collision course with the two tech giants as it faces scrutiny over what critics say is an overly interventionist approach to regulation.
The Prime Minister, Keir Starmer, launched a public rebuke of the CMA’s strategy in front of international investors at his government’s inaugural investment summit last year, saying the body needed to “take[..] growth as seriously as this room does.”
Ministers last week also ousted the chair of the CMA due to what Rachel Reeves described as a “different approach” to growth.
Whether to launch a full investigation will now be partially in the hands of the CMA’s new chair, Doug Gurr, the former boss of Amazon’s UK operations. He has pledged to reshape the CMA’s approach and sharpen its focus on growth.
Suggestions of a probe were met with immediate resistance from Gurr’s former employer and Microsoft today.
“The proposed intervention […] is not warranted,” an Amazon spokesperson said, adding that the CMA should “carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the UK”.
Rima Alaily, corporate vice president at Microsoft, said the CMA’s draft report “should be focused on paving the way for the UK’s AI-powered future, not fixating on legacy products launched in the last century”.
“The cloud computing market has never been so dynamic and competitive, attracting billions in investments, new entrants, and rapid innovation. What could be better for UK businesses and government?,” she added.